ATENEO CENTRAL BAR OPERATIONS

COMMERCIAL LAW QUESTIONNAIRE COPY

1993 Commercial Law Bar Questions

1) Discuss the negotiability or non-negotiability of the following notes:

a. Note 1:

Manila, September 1, 1993

P2500

I promise to pay Pedro San Juan or order the sum of P2500

(Sgd.) NOEL CASTRO

b. Note 2:

Manila, June 3, 1993

P10000

For the value received, I promise to pay Sergio Dee or order the sum of P10000 in 5 installments, with
the first installment payable on October 5, 1993 and the other installments on or before the 5th day of
the succeeding month thereafter.

(Sgd.) LITO VILLA

Answer:

1) The promissory note is negotiable as it complies with Sec. 1, NIL.

Firstly, it is writing and signed by the maker, Noel Castro.

Secondly, the promise is unconditional to pay a sum certain in money, that is P2,500.00.

Thirdly, it is payable on demand as no date of maturity is specified.

Fourth, it is payable to order.

2) The promissory note is negotiable. All the requirements of Sec. 1, NIL are complied with. The
sum to be paid is still certain despite that the sum is to be paid by instalments (Sec. 2(b), NIL)

Alternative Answer:

The promissory note is not negotiable because the sum payable in instalments is not stated.

2) Larry issued a negotiable promissory note to Evelyn and authorized the latter to fill up the
amount in blank with his loan account in the sum of P1000. However, Evelyn inserted P5000 in

1|1993_Commercial Law
ATENEO CENTRAL BAR OPERATIONS
COMMERCIAL LAW QUESTIONNAIRE COPY

violation of the instruction. She negotiated the note to Julie who had knowledge of the infirmity.
Julie in turn negotiated said note to Devi for value and who had no knowledge of the infirmity.
a. Can Devi enforce the note against Larry and if she can, for how much? Explain.
b. Supposing Devi endorses the note to Baby for value but who has knowledge of the
infirmity, can the latter enforce the note against Larry?

Answer:

1) Yes. Devi can enforce the negotiable promissory note against Larry in the amount of
P5,000.00. Devi is a holder in due course and the breach of trust committed by Evelyn cannot be set up
by Larry against Devi because it is a personal defense. As a holder in due course, Devi is not subject to
such personal defense.

2) Yes. Baby is not a holder in due course because she had knowledge of the breach of trust
committed by Evelyn against Larry which is just a personal defense. But having taken the instrument
from Devi, a holder in due course, Baby has all the rights of a holder in due course. Baby did not
participate in the breach of trust committed by Evelyn who filled the blank but filled up the instrument
with P5,000.00 instead of P1,000.00 as instructed by Larry. (Sec. 58, NIL)

3) Juan Sy purchased from “A” Appliance Center 1 generator set on installment with chattel
mortgage in favor of the vendor. After getting hold of the generator set, Juan Sy immediately
sold it without consent of the vendor. Juan Sy was criminally charged with estafa.To settle the
case extra-judicially, Juan Sy paid the sum of P20000 and for the balance of P5000, he executed
a promissory note for said amount with Ben Lopez as an accommodation party. Juan Sy failed to
pay the balance.
a. What is the liability of Ben Lopez as an accommodation party? Explain.
b. What is the liability of Juan Sy?

Answer:

1) Ben Lopez, as an accommodation party is liable as maker to the holder up to the sum of
P5,000.00 even if he did not receive any consideration for the promissory note. This is the nature of
accommodation. But Ben Lopez can ask for reimbursement from Juan Sy, the accommodated party.

2) Juan Sy is liable to the extent of P5,000.00 in the hands of a holder in due course (Sec. 14 NIL).
If Ben Lopez p[aid the promissory note, Juan Sy has the obligation to reimburse Ben Lopez for the
amount paid. If Juan Sy pays directly to the holder of the promissory note, or he pays Ben Lopez for the
reimbursement of the payment by the latter to the holder, the instrument is discharged.

4) On October 10, 1981, “B” borrowed from “C” the sum of P1500000. To hedge against the
depreciation of the Philippine Peso, it was stipulated in the promissory note executed by “B” in

2|1993_Commercial Law
ATENEO CENTRAL BAR OPERATIONS
COMMERCIAL LAW QUESTIONNAIRE COPY

favor of “C” that the loan shall be paid in the U.S. dollars at the exchange rate prevailing on the
date the obligation was incurred, plus interest at 12% per annum.
a. Is the stipulation valid? Explain.
b. Assuming that the stipulation is invalid, does the obligation to pay subsist? How should
it be discharged?

Answer:

1) No. The obligation was incurred in the Philippines. Hence, the Uniform Currency Law, which
requires payment in the Philippine currency, applies.

2) Yes. It should be discharged in Philippine pesos at the rate of exchange prevailing at the time
of payment.

5) In the annual meeting of the “XYZ” Corporation, the stockholders unanimously adopted a
resolution proposed by the Board of Directors to sell substantially all the fixtures and equipment
used in and about its business. The President of the Corporation approached you and asked for
legal assistance to effect the sale.
a. What steps should you take so that the sale may be valid?
b. What are the 2 instances when the sale, transfer, mortgage or assignment of stock of
goods, wares, merchandise, provision, or materials otherwise than in the ordinary
course of trade and the regular prosecution of the business of the vendor are not
deemed to be a sale or transfer in bulk?

Answer:

1) The requirements of the Bulk Sales Law must be complied with. The seller delivers to the
purchaser a list of his creditors and the purchaser in turn notifies such creditors and the purchaser in
turn notifies such creditors of the proposed sale at a stipulated time in advance.

2) If the sale and transfer is made (1) by vendor, mortgagor, transferor or assignor who produces
and delivers a written waiver of the provisions of the Bulk Sales Law from his creditors as shown by the
verified statement; and (2) by a vendor, mortgagor, transferor, or assignor who is an executor,
administrator, receiver, assignee in insolvency, or public officer acting under judicial process, the sale or
transfer is not covered by the Bulk Sales Law.

6) Questions:
a. ""A"" invested P500,000.00 in a security agency on October 30,1990. He was charged
with being a dummy of his friend, a foreginer. If you were the prosecutor, what
evidence can you present to prove violation of the Anti-Dummy Law?

3|1993_Commercial Law
ATENEO CENTRAL BAR OPERATIONS
COMMERCIAL LAW QUESTIONNAIRE COPY

b. Juana de la Cruz, a common-law wife of a foreigner wrested the control of a television

firm. At the instance of the minority group of the firm, she was charged with vioolation
of the Anti-Dummy Law. May she be convicted by the mere fact that she is a common-
law wife of a foreigner? Explain."

Answer:

1) A allows or permits the use or exploitation or enjoyment of a right, privilege or business, the
exercise or enjoyment of which is expressly reserved by the Constitution or the laws to the citizens of
the Philippines. The prosecutor should prove the above elements of the crime and also the fact that A
does not have the means and resources to invest P500,000.00 in the security agency.

Alternative Answer;

The prosecutor may establish the fact that the P500,000.00 would constitute a major
investment and yet A is not even elected member of the Board or one of the officers. Furthermore, it
may be also shown that A does not even have the means to raise the P500,000.00 and that the officers
or majority of the directors are foreigners.

2) No. The mere fact of being a common law wife of a foreigner does not bring her within the
ambit of the Anti-Dummy Law.

Alternative Answer:

If the candidate assumes the fact that being a common-law wife, she is the one running the
business, this raises the prima facie presumption of violation of the Anti-Dummy Law. (RA 6084), he
should be given credit.

7) A foreign firm is engaged in the business of manufacturing and selling rubber products to
dealers who in turn sell them to others. It also sells directly to agricultural enterprises,
automotive assembly lants, public utilities which buy them in large bulk, and to its officers and
employees.
a. Is there a violation of the Retail Trade Law? Explain.
b. May said firm operate a canteen inside the premises of its plant exclusively for its
officials and employees without violating the Retail Trade Act? Explain."

Answer:

1) On the assumption that the foreign firm is doing business in the Philippines, the sale to the
dealers of agricultural enterprises, automotive assembly plants, and public utilities is wholesale and
therefore, not in violation of the Retail Trade Act. (BF Goodrich v. Reyes, 121 SCRA 363)

4|1993_Commercial Law
ATENEO CENTRAL BAR OPERATIONS
COMMERCIAL LAW QUESTIONNAIRE COPY

2) Yes. The operation of the canteen inside the premises exclusively for its officers and
employees, would amount to an input in the manufacturing process and, therefore, does not violate the
Retail Trade Act.

8) BV agreed to sell to AC, a Ship and Merchandise Broker, 2500 cubic meters of logs at $27 per
cubic meter FOB. After inspecting the logs, CD issued a purcahsed order.On the arrangements
made upon instruction of the consignee, H&T Corporation of Los Angeles, California, the SP
Bank of Los Angeles issued an irrevocable letter of credit available at sight in favor of BV for the
totl purchase price of the logs. The letter of credit was mailed to FE Bank with the instruction
""to forward it to the beneficiary."" The letter of credit provuded that the draft to be drawn is
on SP Bank and that it be accompanied by, among other things, a certification from AC, stating
that the logs have been approved prior to shupment in accordance with the terms and
conditions of the purchase order.Before loading on the vessel chartered by AC, the logs were
inspected by custom inspectors and representatives of the Bureau of Forestry, who certified to
the good condition and exportability of the logs. After the loading was completed, the Chief
Mate of the vessel issued a mate receipt of the cargo which stated that the logs are in good
condition. However, AC refused to issue the required certification in the letter of credit. Because
of the absence of the certification, FE Bank refused to advance payment on the letter of credit.
a. May FE Bank be held liable under the letter of credit? Explain.
b. Under the facts stated above, the seller, BV, argued that FE Bank, by accepting the
obligation to notify him that the irrevocable letter of credit has been transmitted to it
on his behalf, has confirmed the letter of credit. Consequently, FE Bank is liable under
the letter of credit. Is the argument tenable? Explain."

Answer:

1) No. The letter of credit provides as a condition a certification from AC. Without such
certification, there is no obligation on the part of FE Bank to advance payment of the letter of credit
(Feati Bank v. Court of Appeals, 196 SCRA 576)

2) No. FE Bank may have confirmed the letter of credit when it notified BV, that an irrevocable
letter of credit has been transmitted to it on its behalf. But the conditions in the letter of credit must
first be complied with, namely, that the draft be accompanied by a certification frm AC. Further,
confirmation of a letter of credit must be expressed. (Feati Bank v. Court of Appeals, 196 SCRA 576)

9) Ferdie is a patent owner of a certain invention. He discovered that his invention is being
infringed by Johann.
a. What are the remedies available to Ferdie against Johann?
b. If you were the lawyer of Johann in the infringement suit, what are the defenses that
your client can assert?"

Answer:

5|1993_Commercial Law
ATENEO CENTRAL BAR OPERATIONS
COMMERCIAL LAW QUESTIONNAIRE COPY

1) The following remedies are available to Ferdie against Johann.

a) Seize and destroy

b) injunction

c) damages in such amount may have been obtained from the use of the invention if properly
transacted which can be more than what the onfringer (Johann) received.

d) attorney’ fees and costs

2) These are the defences that can be asserted in an infringement suit:

a) Patent is invalid (Sec. 45 RA 165 as amended)

b) Patent is not new or patentable

c) specification of the invention does not comply with Sec. 14

d) Patent was issued not to the true and actual inventor, designer or author of the utility model
or the plaintiff did not derive his rights from the true and actual inventor, designer or author of the
utility model (Sec. 28, RA 165 as amended)

10) S Insurance Company issued a Personal Accident Policy to Bob Tan with a face value of
P500,000.00.In the evening of September 5, 1992, after his birthday party, Tan was in a happy
mood but not drunk. He was playing with his hand gun, from which he previously removed the
magazine. As his secretary was watching television, he stood in front of her and pointed the gun
at her. She pushed it aside and said that it may be loaded. He assured her that it was not and
then pointed it at his temple. The next moment, there was an explosion and Tan slumped to the
floor lifeless.The wife of the deceased sought payment on the policy but her claim was rejected.
The insurance company agreed that there was no suicide. However, it was the submission of the
insurance copany that there was no accident. In support thereof, it contended (a) that there was
no accident when a deliberate act was performed unless some additional, unexpected,
independent and unforseen happening occur which produces or brings about the injury or
death; and (b) that the insured willfully exposed himself to needless peril and thus removed
himself from the coverage of the insurance policy. Are the two contentions of the insurance
company tenable? Explain.

Answer:

No. These two (2) contentions of the insurance company are not tenable. The insurer is liable for
injury or death even due to the insured’s gross negligence. The fact that the insured removed the
magazine from the handgun means that the insured did not wilfully expose himself to needless peril. At
most, the insured is only guilty of negligence. (Sun Insurance v. Court of Appeals, 21 SCRA 554)

6|1993_Commercial Law
ATENEO CENTRAL BAR OPERATIONS
COMMERCIAL LAW QUESTIONNAIRE COPY

11) HL insured his brand new car with P insurance company for comprehensive coverage wherein
the insurance company undertook to indemnify him agains loss or damage to the car (1) by
accidental collision xxx (2) by fire, external explosion, burglary, or theft, and (3) malicious act.
After a month, the car was carnapped while parked in the parking space in fron of the
intercontinental hotel in makati. HL's wife who was dirving said car before it was
carnappedreported immediately the incident to various government agencies in compliance
with the insurance requirements. Because the car could not be recovered, HL filed a claim for
the loss of the car with the insurance company but it was denied on the ground that his wife
who was driving the car when it was carnapped was in possession of an expired driver's license,
a violation of the authorized driver clause of the insurance company. (A) may the insurance
compnay be held liable to indemnify HL for the loss of the insured vehicle? Explain. (B)
supposing that the car was brought by HL on installment basis and there were installments due
and payable before the loss of the car as well as installments not yet payable. Because of the
loss of the car, the vendor demanded from HL the unpaid balance of the promissory note. HL
resisted the demand and claimed that he was only liable for the installments due an payable
before the loss of the car but no longer liable for the other installments not yet due at the time
of the loss of the car. Decide.

Answer:

1) yes. The car was lost due to theft. What applies in this case is the theft clause and not the
authorized driver clause. It is immaterial that HL’s wife was driving the car with an expired driver’s
license at the time it was carnapped (Perla Compania de Seguros vs. Court of Appeals, 208 SCRA 487)

2) The promissory note is not affected by whatever befalls the subject matter of the accessory
contract. The unpaid balance on the promissory note should be paid and not only the instalments due
and payable before the loss of the car.

12) The city of manila passed an ordinance banning provincial buses from the city. The ordinance
was challenged as invalid under the public serice act by X who had a certificate of public
convenience to operate auto-trucks with fixed routes from certain towns in Bulacan and Rizal to
Manila and within Manila. Firstky, he claimed that the ordinance was null and void because,
among other things, it in effect amends his certificate of public convenience, a thing which only
the Public Service Commission can do under section 16 of the Public Service Act. Under said
section, the commission is empowered to amend, modify or revoke a certificate of public
convenience after notice and hearing. Secondly, he contended that even if the ordinance was
valid, it is only the commission which can require compliance with its provisions under Section
17 (j) of said act and since the implementation of the ordinance was without santion or approval
of the Commission, its enforcement was unauthorized and illegal.

7|1993_Commercial Law
ATENEO CENTRAL BAR OPERATIONS
COMMERCIAL LAW QUESTIONNAIRE COPY

a. May the reliance of X on section 16 (m) of the public service act be sustained? Explain.
b. Was X correct in his contention that under Section 17 (j) of the public service act it is
only the commission which can require compliance with the provisions of the ordinance.
Explain."

Answer:

1) No. |The power vested in the Public Service Commission under Section 16 (m) is subordinate
to the authority of the City Council of Manila under Section 18 (hh) of its revised charter, to superintend,
regulate or control the streets of the City of Manila (Lagman v. City of Manila, 17 SCRA 579)

2) No. The powers conferred by law upon the Public Service Commission were not designed to
deny or supersede the regulatory power of local governments over motor traffic in the streets subject to
their control (Lagman v. City of Manila, 17 SCRA 579)

13) Questions:
a. Robert is a holder of a certificate of public convenience to operate a taxicab service in
Manila and suburbs. One evening, one of his taxicab units was boarded by three robbers
as they escaoed after staging a hold-up. Because of said incident, the Lant
Transportation Franchising and Regulatory Board revoked the certificate of public
convenience of Robert on the ground that said operatoer failed to render safe, proper
and adequate service as required under section 19 (a) of the public service act.
i. Was the revocation of the certificate of public convenience of Robert justified?
Explain
ii. When can the commission exercise power to suspend or revoke certificate of
public convenience?
b. Pepay, a holder of a certificate of public convenience failed to register the complete
number of units required in her certificate. However, she tried to justify such failure by
the accidents that allegedly befell her, claiming that she was so shocked and burdened
by the successive accidents and misfortunes that she did not know what she was doing,
she was confused and thrown off tangent momentarily, although she always had the
moey and financial ability to buy new trucks or repair the destroyed one. Are the
reasons given by Pepay sufficient grounds to excuse her from completing her units?
Explain"

Answer:

1. a) No. A single hold-up incident which does not link Robert’s taxicab cannot be construed that
he rendered a service that is unsafe, inadequate and improper (Manzanal v. Ausejo, 164 SCRA 36)

8|1993_Commercial Law
ATENEO CENTRAL BAR OPERATIONS
COMMERCIAL LAW QUESTIONNAIRE COPY

b) Under Section 19(a) of the Public Service Act, the Commission (Board) can suspend or revoke
a certificate of public convenience when the operator fails to provide a service that is safe, proper or
adequate, and refuses to render any service which can be reasonably demanded and furnished.

2) No. The reasons given by Pepay are not sufficient grounds to excuse her from completing her
units. The same could be undertaken by her children or by other authorized representatives (Sec. 16(n)
Public Service Act; Halili vs. Herras, 10 SCRA 769

14) JRT, Inc. entered into a contract with C. Co. of Japan to export anahaw fans valued at $23,000.
As payment thereof, a letter of credit was issued to JR, Inc. by the buyer. The letter of credit
required the issuance of an on-board bill of lading and prohibited the transhipment. The
President of JRT, Inc. then contracted a shipping agent to ship the anahaw fans through O
Containers Lines, specifying the requirements of the letter of credit. However, the bill of lading
issued by the shipping lines bore the notation recieved for shipment and contained an entry
indicating transhipment in Hong Kong. The President o JRT, Inc. personally received and signed
the bill of lading and despite the entries, he delivered the corresponding check in payment of
the freight. The shipment was delivered at the port of discharge but the buyer refused to accept
the anahaw fans because there was no on-board bill of lading and there was transhipment since
the goods were transferred in Hong Kong from MV Pacific, the feeder vessel, to MV Oriental, a
mother vessel. The same cannot be considered transhipment because both vessels belong to
the same shipping company.
a. Was there transhipment? Explain.
b. JRT, Inc. further argued that assuming there was transhipment, it cannot be deemed to
have agreed thereto even if it signed the bill of lading containing such entry because it
has made known to the shipping lines from the start that transhipment was prohibited
under the letter of credit and that, therefore, it had no intention to allow transhipment
of the subject cargo. Is the argument tenable? Explain"

Answer:

1) Yes. Transhipment is the act of taking cargo out of one ship and loading it in another. It is
immaterial whether or not the same person, firm or entity owns the two (2) vessels. (Magellan v. Court
of appeals)

2) No, JRT, Inc. is bound by the terms of the bill of lading when it accepted the bill of lading with
full knowledge of its contents which included transhipment in Hongkong. Acdeptance under such
circumstances makes the bill of lading a binding contract. (Magellan v. Court of appeals)

15) A shipped thirteen pieces of luggage through LG Airlines from Teheran to Manila as evidence by
LG Air Waybill which disclosed that the actual gross weight of the contents or the value of the
thirteen pieces of luggage. After the said pieces of luggage arrived manila, the congsignee was

9|1993_Commercial Law
ATENEO CENTRAL BAR OPERATIONS
COMMERCIAL LAW QUESTIONNAIRE COPY

able to claim from the cargo broker only twelve pieces, with a total weight of 174 kilograms. X
advised the airlines of the loss of one of the luggage and of the contents thereof. Efforts of the
airlines to trace the missing luggage were fruitless. Since the airlines failed to comply with the
demand of X to produce the missing luggage. X filed an actoin for breach of contract with and
the damages against the LG Airlines. In its answer, LG allaged that the warsaw convention which
limits the liability of the carrier, if any, with respect to cargo to a sum of $20 per kilo or $9.07
per pound, unless a higher value is declared in adance and additional charges are paid by the
passenger and the conditions of the contract as set forth in the air waybill, expressly subject the
contract of the carriage of cargo to the Warsaw convention. May the allegation of LG Airlines be
sustained? Explain

Answer:

Yes. Unless the contents of a cargo are declared or the contents of a lost luggage are proved by
the satisfactory evidence other than the self-serving declaration of one party, the contract should be
enforced as it is the only reasonable basis to arrive at a just award. The passenger or shipper is bound by
the terms of the passenger ticket or the waybill. (Pan Am vs. Rapadas, 209 SCRA 67)

16) A is a stockholder of PREC. He was given one share by another stockholder to qualify as a
director. A was not re-elected director but continued to be a shareholder. When he was still
director, A discovered that PREC issued 10K shares free of charge to X, PREC's lawyer. a) can A
bring an action in the name of the corp to question the shares? b) can X question the right of A
to sue in behalf of the corp with only one share? c) is X's share watered stock?

Answer:

1) As a general rule, A cannot bring a derivative suit in the name of the corporation concerning
an act that took place before he became a stockholder. However, if the act complained of is a continuing
one, a may do so.

2) No. In a derivative suit, the action is instituted/brought in the name of a corporation and
reliefs are prayed for therein for the corporation, by a minority in terms of the number of shares owned
by a stockholder bringing the action in behalf of the corporation (San Miguel Corp. v. Khan, 176 SCRA
448)

3) No. Watered stocks are those sold by the corporation for less than the par/book value. In the
instance case, it will depend upon the value of services rendered in relation to the total par value of the
shares.

10 | 1 9 9 3 _ C o m m e r c i a l L a w
ATENEO CENTRAL BAR OPERATIONS
COMMERCIAL LAW QUESTIONNAIRE COPY

17) AB Inc. was incorporated as a non-stock/profit to establich a library and museum. Its Articles
provide a board of 5, authorized to admit new members, and allows to receive donations from
members.
a. Can it use the donations for purchase of food and medicine for distribution to victims of
an eruption?
b. Can it operate a specialty restaurant for the general public?
c. One trustee died and 2 resigned. How will the vacancies be filled?"

Answer:

1) Yes. (Sec. 36 (9) Corporation Code) as long as the amount of donation is reasonable.

2) If the purposes of the corporation are limited to the establishment and maintenance of the
library and museum as stated in the problem, the foundation cannot operate a specialty restaurant that
caters to the general public. In such case, the action of the foundation will be ultra vires.

Alternative Answer:

If the act of the corporation is justified by the secondary purpose of the corporation which
includes the act of operating a restaurant, the foundation will be within its power to do so.

3) Since there are only two (2) of the members of the Board of Trustees remaining and there is
no quorum, the vacancies will have to be filled up in a special meeting of the members (Sec. 29,
Corporation Code)

18) A purchased from S 150 cavans of palay on credit, and deposited it in W's warehouse. W issued
Aa negotiable warehouse receipt and A negotiated it to B for value and good faith.
a. Who has a better right to the deposit, S (unpaid vendor) or B?
b. When is the warehouseman obliged to deliver to A?"

Answer:

1) B has a better rights than S. The right of the unpaid seller S to the goods was defeated by the
act of A in endorsing the receipt to B.

2) The warehouseman can be obliged to deliver the palay to A if B negotiates back the receipt to
A. In that case, A becomes a holder again of the receipt, and A can comply with Sec. 8 of the Warehouse
Receipts Law.

11 | 1 9 9 3 _ C o m m e r c i a l L a w
ATENEO CENTRAL BAR OPERATIONS
COMMERCIAL LAW QUESTIONNAIRE COPY

19) The Articles of MIC states its principal place of business in Pasig. The princil offices are at Ortigas
Center, Pasig while the factory is in Manila. It holds its annual stockholder's meeting at the
Manila Hotel and its board meeting in Makati. The By-laws are silent to the place of meeting.
a. Who shall preside the director's meetings?
b. Can a stockholder, who did not attend the stockholeder's meeting, question the validity
of the resolutions passed?
c. Can they also question the validity of the resolution of the board?"

Answer:

1) The President presides over the meeting of the directors, if there is no position of Chairman
provided in the By-Laws. If there is the position of Chairman provided in the By-Laws, the Chairman
presides over the meeting of the Directors (Sec. 54 Corporation Code)

2) No. The law provides that the annual stockholder’s meeting shall be held in the city or
municipality where the principal office of the Corporation is located. For this purpose, the law also
provides that Metro Manila is considered a city or municipality. Since the principal place of business of
MIC is Pasig, Metro Manila, the holding of the annual stockholder meeting in Manila is proper. (Sec.
51,Corp.Code)

3) No. The ;aw allows the Board of Directors to hold the meeting anywhere in the Philippines. The
holding of the board meeting in Makati was proper and the validity of the resolution adopted by the
Board in that meeting cannot be questioned. (Sec. 53 Corp. Code)

20) Julie and Alma formed a business partnership. Under the business name Pino shop, the partnership
engaged in a sale of construction materials. Julie insured the stocks in trade of pino Shop with WGC
Insurance Company for P350, 000.00. subsequently, she again got an insurance contract with RSI for
P1,000,000.00 and then from EIC for P200,000.00. A fire of unknown origin gutted the three insurance
companies. However, her claims were denied separately for breach of policy condition which required
the insured to give notice of any insurance effected covering the stocks in trade. Julie went to court and
contended that she should not be blamed for the omission, alleging that the insurance agents for WGC,
RSI and EIC knew of the existence of the additional insurance coverages and that she was not informed
about the requirement that such other or additional insurance should be stated in the policy.

1) Is the contention of Julie Tenable? Explain.

2( May she recover on her fire insurance policies? Explain.

Answer:

No. An insured is required to disclose the other insurances covering the subject matter of the
insurance being applied for. (New Life Enterprises v. Court of Appeals. 207 SCRA 669)

12 | 1 9 9 3 _ C o m m e r c i a l L a w
ATENEO CENTRAL BAR OPERATIONS
COMMERCIAL LAW QUESTIONNAIRE COPY

2) No, because she is guilty of violation of a warranty/ condition.

13 | 1 9 9 3 _ C o m m e r c i a l L a w